Bangladesh Bank Governor Dr Atiur Rahman on Sunday praised the roles played by the shariah based Islamic Banks in Bangladesh and expressed the hope that the role of shariah based banking would be widened in Bangladesh’s inclusive, environmentally sustainable economic growth.
The BB governor said this while addressing a seminar on Shariah Banking-Bangladesh perspective at the Redisson Hotel in Dhaka on Sunday. The function was also addressed by State Minister for Finance Mr. M.A. Mannan MP, IDB President H.E. Dr. Ahmad Mohammed Ali.Dr. Atiur praised the comprehensive keynote paper on shariah based Islamic banking in Bangladesh by eminent Islamic Banking scholar and erstwhile Islamic Banking practitioner Mr. M. Azizul Huq and said the paper gave a very heartening account of already significant and steadily growing role of Islamic banking in socially responsible financing of trade and output activities in the country’s economy, including under-served and unserved sectors like agriculture and MSMEs. Shariah based Islamic banking and finance has come to be recognised as a mainstream activity not just among Muslim majority countries but also in the broader arena of global finance; gaining ground in the post-global financial crisis years because of its in-built risk sharing, speculation-averse, value driven features yielding financial and real sector stability outcomes superior to those of conventional banking. In Bangladesh shariah based Islamic banking already constitutes about a fifth of the total banking market, the BB Governor said.
Excerpts: “I am gratified to see Bangladesh Bank’s (BB’s) supportive role for Islamic Banking adequately reflected in the key note paper. We have issued Guidelines for Islamic banking in Bangladesh using an approach that delegates to the shariah based financing community the self-regulation and oversight of its shariah compliance practices, with the Bangladesh Bank (BB) focusing on their solvency, liquidity, capital adequacy and corporate governance including risk management and internal controls. This has served well thus far in providing a level playing field for shariah based financing alongside the conventional options. As mentioned in the keynote paper, BB acted early on towards introduction of a government Islamic Investment Bond of 6-month tenor to facilitate liquidity management of Islamic banks, introduction of another similar instrument of 3-month tenor for further facilitation is at the final stage. A shariah compliant mode of refinance support from BB’s Export Development Fund (EDF) has placed Islamic banks in level playing field with conventional banks in export financing. Introduction of similar shariah compliant refinance support against SME and other thrust sector lending by Islamic banks is also underway. Going forward, we would like to see more of Islamic financing in Bangladesh in the participatory risk sharing musharaka and murabaha financing modes, particularly for MSMEs and ‘green’ or environmentally benign ventures, rather than in the non participatory mudaraba and ijarah modes.
“The Islamic banking and finance community in Bangladesh is actively participating in IFSB and other global forums of Islamic banking and finance, some of them are also participating in IDB led Islamic finance syndications. I have no doubt that the spirit of cooperation and mutual cooperation will continue unhindered.
Let me conclude here with hearty congratulate to IBCF for organising the seminar, looking forward to its contribution to further widening the role of shariah based banking in Bangladesh’s inclusive, environmentally sustainable economic growth.”
(From the Bangladesh Bank Governor’s address made at an IBCF seminar on Shariah Banking-Bangladesh perspective held at Redisson Hotel In Dhaka on Sunday).
